Energy Crisis

Currently, the energy crisis means 6.5 million UK households are in fuel poverty. In October 2022 energy bills are predicted to rise to an average of £2,800 a year, an increase of over 40%

Across the UK, cold homes are already damaging the lives of the poorest households.


Fuel poverty statistics explainer

The latest fuel poverty statistics for England, produced by the UK Government, differ from our projections because they relate to 2020, and use a different methodology. Read here for detail on why they are different from our projections.

How you can make a difference

We think the UK Government’s measures are ‘woefully inadequate’ The support is too broad to help the most vulnerable.

With millions of people struggling, please let your MP know that these measures do not go far enough. If you would like to support us please let them know.

Advice on how to save energy

NEA has developed a series of multi-lingual information leaflets to provide advice on how to save energy.

Leaflets include a home energy checklist, advice on electrical appliances and dealing with damp and condensation, among other topics.

Supporting vulnerable energy customers through the energy crisis

We highlight what positive steps can be taken now by the UK Government and energy regulator Ofgem to respond to the current energy crisis and support vulnerable energy customers.


How much is the average energy bill?

In May 2022, the UK Government announced a series of measures in an attempt to stave off the looming energy crisis. With average bills set to hit £2,800 a year from October, these measures were much needed. Ofgem had predicted the average monthly bill would be £233, an increase of over 40%. Remember, this is a prediction and many homes are not average. Lots of people would have paid more. The measures announced in May will go some way to mitigating the new increase, especially for the most vulnerable.

The new price cap rise prediction comes after the price cap rise in April 2022, when the average bill increased by 54% from £1,277 to £1,971. This works out as £164 a month, on average, when previously it was £106. The cap rose because of sustained increases in the wholesale price of gas.

The news was even worse for prepayment meter customers. Before the April price cap rise, prepayment meter customers were paying, on average, £1,309 annually but their bills rose to £2,017 a year.

To help demonstrate the impact this rise had on households, we, at National Energy Action, worked out how much the cost of energy had increased in terms of a weekly shop. The pictured basket of shopping costs £14.40. April’s price cap increase means that households started paying £14.40 extra every week just on their energy bills.

At least one in four UK households are in fuel poverty

National Energy Action estimates that the number of UK households in fuel poverty following the April price cap rise increased by 2 million, from 4.5 million to 6.5 million, an increase of more than 50% in just over six months. This means that almost a quarter of all UK households are in fuel poverty.

Additionally:

  • Up to 45% (614,000) of all households in Wales could be in fuel poverty following the price cap increase of April 2022
  • Up to 8% (115,000) of all households in Wales could be in severe fuel poverty (needing to spend more than 20% of their income just to keep warm).

It’s also important to note that our estimated increase in fuel poverty is well below the modelled increases for England and Wales by the Resolution Foundation and the Welsh Government. The energy crisis is likely worse even than our estimates.

More households in fuel poverty means more households falling into debt, more households cutting back on other essentials. It means more households rationing their heating to unhealthy levels. We are seeing more demand for our energy advice and income maximisation services. We’re seeing more examples of struggling households resorting to coping strategies such as only heating one room, wearing coats indoors and using public places such as libraries to stay warm.

Polling conducted by YouGov on behalf of National Energy Action showed that 6 out of 10 British households say they would reduce their heating use by a fair amount/great deal if the cost of heating doubles. Too many would have to make a desperate choice between heating and eating.

Level of the GB energy price cap of annual standard variable tariffs for average households (Oct 2018 to Oct 2022)

These price increases will impact all households. But for those who were already struggling to pay their bills, it’s catastrophic. We told the UK Government that without any additional support, millions would sink further into debt. Many would turn off the heating, leaving them at acute risk of serious ill-health and putting further unwanted strain on our stretched health services.

What is the price cap?

The energy price cap puts an upper limit on the amount that suppliers can charge customers on default tariffs (also known as standard variable tariffs). It was introduced by the government and is administered and calculated by the energy regulator Ofgem. It applies to default energy tariffs, whether paid by direct debit, standard credit or a prepayment meter. Prepayment meter customers pay more than direct debit customers. That’s because Ofgem says it is more expensive for suppliers to service them.

The price cap limits the rates a supplier can charge for their default tariffs. These include the standing charge and price for each kWh of electricity and gas. It does not cap the total bill, which will change depending on how much energy you use. But Ofgem presents it in terms of an average user’s annual bill, to simplify things for the general public.

Our fuel poverty estimate

National Energy Action bases its projections on the 10% definition of fuel poverty. This gives a realistic picture of the scale of fuel poverty in periods of more volatile energy prices. The government’s estimates for England are based on the efficiency of homes, which is not sensitive to changes in energy prices. Our projections are broadly in line with robust analysis by the Resolution Foundation surrounding ‘fuel stress’. This is also based on the 10% fuel poverty metric, but for England only.

What is the UK Government doing?

In May 2022, less than 48 hours following Ofgem’s announcement that the price cap could rise to £2,800 on 1 October 2022, Chancellor Rishi Sunak unveiled measures to help households with the high cost of energy this winter, as well as a windfall tax on oil and gas companies to raise £5bn. These are:

Extra targeted support

  • People on lowest incomes/means-tested benefits – 8 million households – will receive a one-off ‘cost of living payment’ of £650, totalling £5 billion, to be paid in July and Autumn directly to bank accounts.
  • Pensioners – 8 million – who are in receipt of Winter Fuel Payment will receive a one-off pensioner cost of living payment of £300.
  • Disabled people – 6 million in receipt of non-means-tested disability benefits – will receive a one-off disability payment worth £150. Many will also receive the means-tested benefits £650 payment, so a total of £800 which will offset the average price increase from October.
  • Household Support Fund will be extended by £500 million from October and there will be legislation to extend it to all devolved nations.
  • One-third of all households will benefit from the cost-of-living payments

Universal support

  • £200 rebate announced in February will be doubled to £400 and will be a grant, which means it doesn’t need to be paid back.

The government claims the total value of new measures is £15 billion and the total package of support since February is £37 billion, with 75% going to vulnerable households.

It also claims that the majority of households will receive £550 (£400 rebate and the £150 council tax rebate paid from April), while pensioners will get £800 and households on means-tested benefits will receive £1200 in support.

This comes after the Government introduced two measures earlier this year. One was a £200 rebate, given in October 2022 but would have to be paid back. This has now been replaced by the £400 rebate. The Government also introduced a £150 council tax energy rebate for householders in bands A to D in England.

Issues with the Council Tax Energy Rebate

We had concerns about the £150 council tax rebate scheme. The problem is that it is often the poorest households that do not pay council tax by direct debit. That’s either because they do not have a bank account or because they manage their finances on a more ad hoc basis.

“There are serious concerns that those with the greatest need will be least able to access the money,” said National Energy Action chief executive Adam Scorer.

We worked with the BBC, which looked at the websites of 331 billing authorities in England and Wales responsible for administering the rebates. We found a variance in timings of payments for those who pay their council tax by direct debit and those who do not. This is because direct debit payments are easier to process, as local authorities already have the household’s details.

As of the end of May 2022, more than 280 English and Welsh councils said payments should have been made directly into people’s bank accounts. However, most said customers who did not pay by direct debit were likely to be contacted over the coming weeks, by email or by post, and urged to make an application online or over the telephone. Only 15 councils said they were already mailing out Post Office vouchers to non-direct debit households for them to exchange for cash.

What government must do about the Energy Crisis

The UK Government needs to step in to alleviate the increasingly desperate situations the most vulnerable households are finding themselves in. NEA is calling for:

  1. Introduce a social tariff for energy alongside the price cap.
  2. Help to clear utility debts through starting a payment matching scheme – matching every pound that a household makes towards their utility debt repayments
  3. Improve the energy efficiency of fuel poor households:

a. Prioritise Parliamentary time for the passage of ECO 4 legislation.

b. Commit the remainder of the funding promised to upgrade fuel poor homes in the Conservative Party Manifesto.

c. Set regulatory minimum energy efficiency standards for rented properties.

Where can I get help now?

If you or someone you know can’t afford to heat their home then we’re here to help. We offer a range of advice and support both directly to people in need, and via frontline workers and other intermediaries. For advice and support on what you can do click here. Also, contact your energy supplier. You may also be entitled to access the Local Authority Assistance Fund or Winter Fuel Support Scheme in Wales.


For media enquiries please contact anna.cook@nea.org.uk